Two of Waikato’s biggest rural contractors want the arable industry to update its maize growing contracts to account for the massive increase in input prices seen in the past 12 months.
Waikato contractors Brook Nettleton and John Austin had contracts with farmers signed at the start of the season to supply farmers with maize.
They told the Waikato Federated Farmers arable annual meeting in Hamilton they were caught out by the massive hike in input costs between sowing and harvest times.
“We have tried to put our costs up by 20-25%, fuel’s gone up 100%, machinery’s gone up 25-30% and labour’s probably done the same,” Nettleton said.
The harvest period has also condensed from previously being in March-April to now occurring in March.
“It’s a massive cost because we have to get other people to help do the harvest because we can’t do it all in March,” he said.
“The growers’ issue of not being profitable is going to affect us, the growers issue of not being profitable as it supplies feed to the dairy industry has an impact to that.”
John Austin
Contractor
His business, Blue Grass Contracting, operates 12 truck and trailer units that he typically uses for harvest.
This year he used an extra 15 to try and get it done.
“All of a sudden it was costing us $30,000-$40,000 a day to finish our season.”
Those costs have to be passed on, he said.
Austin said their fuel costs doubled over the course of the season and this price volatility was a big risk to their business.
“Brook and our issue is everybody’s issue,” he said.
“The contracts we sign to plant need to be viable at harvest.”
Waikato Federated Farmers arable chairman Keith Holmes supported the call.
“Somehow we need to make sure the farmer’s not screwed, the contractor’s not screwed and everybody else in the chain is not screwed to the point that they go bankrupt,” he said.
The maize industry, with the help of Federated farmers, will work on a contract template for farmers and contractors to account for the true cost of growing the crop.
Austin said the industry has to be aware everybody’s issues.
“The growers’ issue of not being profitable is going to affect us, the growers issue of not being profitable as it supplies feed to the dairy industry has an impact to that.”
Managing those costs inside the industry so the product still reaches the end user while ensuring everyone is viable was really important.
“If anybody loses in that chain, the industry is screwed,” he said.
Nettleton said the contract has to flexible enough to take into consideration the volatility that input prices are going through.
The high costs of growing maize could see many growers not growing it unless it was pre-sold.
“Everybody’s got to be of an understand now that we’re in a different world and that different world is going to have to haver a different understanding of what is the standard.”
Farmers have to realise this is what it costs now to grow maize in Waikato.
“We need to be smarter about it and we need the support of everyone else for farmers to realise this is the true cost.”
Corson Maize national sales manager Graeme Austin said their best cost estimates for growing maize from spray out to covering the stack was $5273.75/hectare.
If grown on-farm using a full fertiliser programme, he said it will cost 25c/kg drymatter and using effluent instead of chemical fertiliser, it would cost 22c/kg DM based on a 20 tonne per hectare yield.
The cost to buy silage in ranged from 40-48 cents depending on the distance travelled.
For maize grain, he estimated it costs around $370/t including storage, drying and kibbling.
He recommended budgeting at $400 a tonne.
He encouraged farmers to sit down with their contractor to work out where those costs could sit knowing it could change over the season.
“There still a real opportunity for growing maize at a reasonable price on the farm that should be acceptable for farmers to pay that based on current payouts and costs of feed.”
